NEWELL BOOSTS PLASTICS WITH RUB BERMAID BUY

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Newell Co. will beef up its plastics stake by buying Rubbermaid Inc.'s Office Products business.

The deal includes Rubbermaid's Maryville, Tenn., facility, which has been expanding blow molding capacity for office furniture, a new market for Newell. Maryville also injection molds a broader range of office and computer accessories than Newell.

Maryville is Office Products' main plant, but Rubbermaid also has plants and distribution facilities around the world, said Rubbermaid spokeswoman Lorrie Paul Crum.

Newell of Freeport, Ill., will have a broad office products portfolio, increasingly demanded by Staples, Office Max and other retail chains, said Eric Bosshard, a financial analyst with Midwest Research/Maxus Group in Cleveland. Rubbermaid, in contrast, has had a small market share among office mass-retailers.

Bosshard predicted more office products makers will consolidate, paralleling the merger trend among consumer product suppliers that broadened their offerings to mass merchandisers.

The Rubbermaid business includes a fast-growing office furniture unit, Eldon and MicroComputer Accessories brands, storage products, waste cans and other plastic products, some of which are made by other Rubbermaid units and contract molders. The 20-year-old business grew through acquisitions and internal expansion and logged $162 million in sales last year.

Newell's office products business includes Sanford writing instruments and markers, Stuart Hall stationery and supplies, Rogers and Keene desktop and computer accessories, and Rolodex filing systems, which Newell bought about two months ago. Newell's office products sales last year were about $742 million.

Newell makes desktop and computer accessories and assembles writing instruments in Madison, Wis. The firm also contracts out some production. A Puerto Rico plant assembles Rolodex products.

Ross Porter, Newell's director of investor relations, said it is too early to know how Newell can integrate the Rubbermaid plastics operations into its own.

Newell's major single plastics business is the Plastics Inc. housewares division of Anchor Hocking. Plastics Inc. is consolidating two injection molding plants in St. Paul, Minn., and operates another in Coon Rapids, Minn. Newell's total housewares sales, including glass products, were $394 million last year.

Porter said Newell also does some plastics molding and outsourcing of hair-care and beauty products and picture frames. Other Newell businesses include home furnishings and hardware.

Wooster, Ohio-based Rubbermaid said it will focus on four, brand-driven core businesses, namely Rubbermaid Home Products and Commercial Products, Little Tikes juvenile products and Graco infant products. Home Products now includes its former Seasonal Products business.

Rubbermaid said May 8 it will sell Office Products for $246.5 million. This is a big premium for a business that analysts estimate has a book value of about $150 million. But Bosshard said that since it is a strategic purchase, a high price could be expected.

Crum said a number of firms were interested in the unit. Rubbermaid will record a one-time gain of about $78 million after taxes from the sale, which it expects to complete by June.

The sale is the final part of a previously announced, major realignment that Rubbermaid expects will lead to annual savings of about $50 million. The firm has closed 10 facilities and cut its work force, eliminated under-performing products and strengthened its presence in Europe and the Asia-Pacific region.

Officials said they do not expect to close any Rubbermaid plants as a result of consolidating the Home and Seasonal Products businesses.